You ViewsVOLUME 18 ISSUE # 41

Wheat crisis

Pakistan harvested a record 27.5 million tonnes of wheat in 2023, but it still needs to import wheat to meet its domestic demand until the next crop in April 2024. It has a shortfall of about 2.6 million tonnes. Some wheat has already been imported, but more is needed. If the government delays its decisions, it may lead to food shortage.

However, some experts and international organisations have warned that the wheat crisis could get worse due to hoarding, smuggling and high prices. Importing wheat now will cost more than Rs6,000 per maund. But the government’s support price for wheat is Rs4,000 in Sindh and Rs3,900 in Punjab. The provincial food departments and the Pakistan Agricultural Storage and Services Corporation (Passco) failed to buy enough wheat from farmers. This was because farmers got a higher price in the market than the government’s rate. Now, farmers and traders have a lot of wheat at their disposal, but they are holding it for higher prices. More wheat will come to the market when the prices go further up.

The government will import wheat, which will be in dollar terms, putting extra burden on the country. Instead, it should float local tenders inviting bids from traders to supply the target amount. Naturally, the lowest bid will clinch the deal, which is likely to be less than the import price of over Rs6,000 per maund. Besides, the entire transaction will be in the local currency.

Another option is for the food depart- ments to buy wheat directly from farmers at, say, Rs5,000 per maund or the market rate. This way, they can meet their target and then decide if more wheat imports are needed. India is also seeking to import eight to nine million tonnes of wheat from Russia at a lower price through a direct deal between the two governments. India’s wheat consumption was estimated at 108 million tonnes for 2023, while its production was 112 million tonnes.

However, wheat prices had risen by 10 per cent within months, and experts suggested that importing about four million tonnes of wheat may prevent a further price hike. The Indian government, instead, decided to import twice as much. This would be the largest grain deal ever between India and Russia. Some reports say that the latter may give the former a discount of $25 to $40 per tonne, which would make the imported wheat much cheaper than the local wheat.

India’s big purchase can influence the quantity of wheat available globally, and that can have an impact on the prices in the world market as well. Pakistan should seek and negotiate better deals with wheat exporters.

Azeem Hakro